The Gold Souq in Dubai put the city on the global map long before the rise of the Burj Al Arab or Burj Khalifa.
The glittering souq on Dubai Creek has more than 300 gold shops selling jewel-encrusted medallion necklaces, gold coins and thick Bedouin bangles known as “father of the thorn”, with display mannequins draped in kilograms of bridal jewellery.
There is every form of gold imaginable. But thanks to increases in the price of the precious metal, currency fluctuations in customers’ home countries and longer holidays than usual, there have been fewer shoppers than normal this summer.
Dubai wholesalers said were sales down 50 per cent compared with last summer.
“This is the slowest that I’ve seen the market in about six years that I’ve been in the business,” said Abhishek Siroya, director at gold wholesalers Siroya Jewellers.
“Even when my suppliers come to my office, if they see one or two customers, they’re like, ‘you have customers right now?’ There’s no one in the market – there’s no one around to buy gold.”
Mr Siroya works at the Gold Centre, a high-rise overlooking the Creek-side souq.
The building is home to Dubai’s gold wholesalers who sell to the city’s 800 gold retailers in a sector that employs more than 13,000 people. He remembers busier times fondly.
“My retailers would call me and say, ‘I’ll just take whatever I can, I need five kilos’,” Mr Siroya said. “You’d have 10, 15 customers at a time in the office. Now, if you go to people’s offices you’re not going to find customers because of the gold fluctuations.”
He estimates sales are down at least 30 to 40 per cent compared with last August.
Mr Siroya said price stability, rather than the price itself, is the most important for buyers.
Ramesh Vora, the director of Dubai wholesaler Bafleh Jewellery, said: “We sell to more than 30 countries but there’s a recession in gold everywhere.
“Currency is down in Senegal and Nigeria by 30 to 40 per cent. Nigeria, especially, was a very big market for us before.”
Dubai sales were down about 20 per cent this month, said Tawhid Abdullah, chairman of the Dubai Gold and Jewellery Group.
“It’s actually a worldwide scenario due to a 12 per cent increase in the gold price,” he said.
“I believe the effect will go down soon as there will be a cool-down on the gold price.”
Summer is always slow for retailers, as tourists and residents flee the heat.
This year, the Eid Al Adha holiday took place in mid-August and lasted five days.
“Usually during Hajj, we have good sales but this year, it was bad,” said Yasin Al Abbadi, a manager with Morganite Jewellery. “Last Eid Al Adha, the sales were better.”
Souq clerks said Dubai’s gold sales are impervious to any politics.
Instead of slow summer sales, they spoke about the potential of Expo 2020, the six-month world fair expected to attract 25 million visitors.
“Dubai’s all about the tourist market, so if tourists are good, sales are good,” said Abdul Lathief Palakodan, a clerk at Darya Jewellery. “We’re waiting for Expo 2020. We’re planning on that business.”
The city had 15.7 million tourists in 2018, with two million from India and 1.6 million from Saudi Arabia.
The gold souq is considered a must-visit destination, attracting savvy shoppers with its tax-free, high-quality gold.
“People always have an idea of the gold business since Dubai is the city of gold and you’re in the hub of gold,” said Mr Siroya.
“Anyone who buys gold here always has a knowledge of gold.”
Wholesalers will know soon whether or not it is merely a seasonal downturn.
Dowry jewellery is bought before the Gulf winter wedding season and it is considered auspicious to buy gold before the Hindu festival of Diwali, which takes place on October 27 this year.
With so much importance and sentiment attached to the precious metal, gold’s long-term demand will never tarnish.
“This month has been tough but I think you have to just bear with it,” said Mr Siroya.
“Even if the price is high, if the prices stay stable for a month or two, movement automatically comes.”
